Whether you’re a small start up or a large MNC, negotiating with suppliers is an essential component of every business. It is important to master negotiation skills and pick up some negotiation tactics if you want to minimize your costs and get more value out of every deal. Here are some tips and tricks to gain an upper hand when it comes to negotiating with new or existing suppliers.

Set goals and objectives

Before you start, you need to have a clear idea of what you want out of each negotiation. List your goals and objectives and establish your desired outcomes for each. To ensure you don’t lose track of what is crucial, decide which areas you are willing to compromise on and which are non-negotiable. You should create a list of guidelines you can use during the supplier negotiation. For example, if you’re sourcing for a computer supplier, you might want to ensure that warranties are a part of the deal.

But remain realistic in your negotiations – it might be better in the long run to first and foremost establish mutually beneficial relationships with your suppliers. This might bring you even better deals in future, or ensure you’re a priority in their dealings.

Do your research

Never go in a negotiation unprepared. Always do some background research on the supply company to get a better idea of what you are looking for. At the very least, learn the industry basics and jargon so you appear better informed. This will in turn gain the respect of your suppliers and you’ll know if anything goes amiss during the negotiation. Put yourself in an advantageous position by being education on the business your supplier does so you won’t be cut short.

To leverage a better deal, you can also do research on the costs and survey them from several different companies in order to pick the best deals. You’ll have a better idea of how much room you have to negotiate if you have a good idea of the actual costs of the product. Also, let the suppliers know that you’ll go with the deal that offers the best value for what you need. This will ensure that prices offered are more competitive. Sites like thunderquote.com, will be able to do this automatically for you and compare quotations from up to 5 vendors.

Understand your supplier

The more important you are to your supplier, the greater your bargaining power. If your supplier is small, new or has many competitors, you might have better leverage in negotiations. It is also useful to identify certain periods of time that you might get a better deal, such as when your supplier has to clear old stock or have spare production capacity that can be utilised.

Before you sign any contract, do a background check on your supplier to ensure they have a good track record and can be relied upon. You don’t want to enter into a long-term contract with suppliers who don’t deliver goods on time, or if they’re at risk of going out of business.

One common negotiation tactic that you should be aware of is counter offering. Never accept the first offer – it usually is much higher than the market price. Make a low counteroffer and ask for more things in return. This is where your research comes in place; knowing the cost of what you require will ensure you don’t settle for an unfair price.

The other party might also try to pressure you into acceptance. If your supplier continuously brings up deadlines or stay silent, they are probably employing pressure tactics to stress you into agreeing to the deal. If you’re not satisfied with the deal, keep negotiating, but be realistic.

Always stay calm and confident when conducting negotiations. Hide telltale emotion and keep your options open, no matter how much you want the deal – or it might just give the other party additional leverage over you. Stick to your guidelines and always have your own procurement policy in mind.

Negotiating with suppliers doesn’t necessarily have to be difficult, but having a plan and a good negotiation tactic definitely comes in handy when you want to secure a decent deal. Ultimately, a good relationship between you and your supplier is the one that could get you great deals in the long run. Maintain an open and honest partnership with your supplier so both parties can benefit.

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ThunderQuote is the most comprehensive business services portal in Singapore, Australia and ASEAN , where hundreds of thousands of dollars of procurement contracts are sourced every month by major companies like Singapore Press Holdings, National Trade Union Congress and more.